Growth in gross domestic product unexpectedly slowed in the April-June quarter and economists have cut estimates for the year through March to 6.8 per cent from 7.3 per cent, the slowest pace in four years.
According to a SBI report, the RBI is likely to maintain status quo on key lending rate in Wednesday’s policy review as it is “stuck in a conundrum” of low growth, mild inflation and global uncertainties.
With the GDP growth falling to a three-year low of 5.7 per cent in the first quarter of the fiscal and retail inflation remaining in the target range, there have been demands of further lowering of the key lending or repo rate.
On the latest justifications being given by the RBI, Franco asked “what was that economics he (Governor Patel) learnt to roll out a financial policy like Demonetisation troubling the entire population?”
“Beginning with Tamil Nadu in 2016, domino effects have spread in 2017 to several states and the total cost of loan waivers amounts to around Rs 1,30,000 crore,” RBI Governor Urjit Patel said.
The government would dilute its stakes in the state-run banks to raise extra capital, suggested Urjit Patel.
India’s Monetary Policy Committee cut’s decides to cut the repo rate by 25 basis points, but, aims remain “focused on its commitment to keeping headline inflation close to 4 per cent on a durable basis”.
“Excluding the HRA impact which will affect the CPI cumulatively, inflation would be a little over 4 per cent by fourth quarter as against 4.5 per cent inclusive of the HRA in the June statement (of RBI policy),” Urjit Patel said.
The Reserve Bank of India on Wednesday slashed the repo rate by 25 basis points to 6 per cent. The growth forecast has unchanged at 7.3 per cent for the current fiscal, said RBI Governor
The RBI informed the Standing Committee on Finance, headed by senior Congress leader M Veerappa Moily, that it had issued tenders for fresh Currency Verification Processing System (CVPS) machines to speed up the counting.
During the course of the meeting, one Congress member even asked whether Reserve Bank of India would be able to provide details of amount of cash deposited post-demonetisation by May 2019–the time when the NDA government completes its five-year term
The panel members have planned to ask Urjit Patel questions regarding RBI’s preparedness for digital transition. They will also question about how much money has come back into the system after the November 8 decision to place the existing currency notes of Rs 1000.
‘Not overly pessimistic about jobs scenario in IT; start-ups can compensate’
The RBI Governor said that creation of a national market, GST will also reduce many inefficiencies within the states while moving goods from within a state and also across the country
The vote marked the first non-unanimous decision in the five meetings since the MPC was formed in September 2016.